Showing papers by "M. Thenmozhi published in 2020"

Does board independence enhance firm value of state-owned enterprises? Evidence from India and China

Abstract: This study aims to examine the effectiveness of governance in state-owned enterprises (SOEs) and explores if board independence enhances the firm value of SOEs in India and China. The study further explores the moderation impact of promoter ownership in enhancing firm value.,The study is confined to government-owned enterprises in India and China and is based on a sample of 53 central government-owned firms listed in National Stock Exchange of India and 110 state-owned firms listed in Shanghai Stock Exchange of China for the period 2010–2017. A fixed-effect panel regression analysis has been used to examine the effect of board independence on firm value.,The study found that board independence adds value to the SOEs in India and China and the presence of independent directors (IDs) in the board of SOEs act as better monitors of performance to protect the interest of minority shareholders. Probably, they minimize agency conflict and provide resources to the firm and management. The greater the government shareholdings, the board independence further enhances value of SOEs in India and China.,Compliance with guidelines on IDs in SOEs serves as an effective corporate governance mechanism and the presence of IDs can signal better firm performance. The government promoters align with the IDs in better monitoring of SOE performance.,The study is unique and contributes to the literature by examining the impact of board independence on firm value in the context of SOEs in India and China and also provides insight on the effect of promoter ownership on the effectiveness on board independence.

Does concentrated founder ownership affect board independence? Role of corporate life cycle and ownership identity

Abstract: We examine the impact of increasing levels of concentrated founder ownership on board independence and extend the knowledge by exploring whether the impact of concentrated founder ownership on board independence varies with firm's life cycle stages, ownership identity, level of external monitoring and type of firms. Using the Indian sample of 13,636 firm-year observations for the period 2001–2015, we find that controlling shareholders influence the board structure and exhibit a non-monotonic relationship. The relationship moves from entrenchment to alignment and again to entrenchment as their shareholding increases. We find that Indian controlling shareholders influence board independence more than their foreign counterparts. We show that business group firms are associated with greater board independence than standalone firms. We also show that controlling shareholders influence board independence of the firm in the growth stage. Our findings support the notion that the effect of concentrated ownership changes with its level of ownership, identity, firm life cycle stages, level of external monitoring and type of firms.

Does economic freedom distance affect long-run post-acquisition performance and ownership level in cross-border acquisitions?

Abstract: Using a large international sample of 35,798 cross-border acquisition (CBA) deals, we find strong evidence that economic freedom distance affects long-run post-acquisition performance and ownership level. We build our arguments using organizational imprinting theory to show that greater economic freedom distance leads to higher post-acquisition performance. However, our findings show that greater ownership level in the target firm adversely affects the imprinting effects in CBA deals. In addition to arbitrage advantages, higher economic freedom distance increases information asymmetry risks for MNEs, prompting them to opt for lower ownership levels. Finally, we demonstrate that ownership decisions of MNEs from emerging economies differ significantly from those that domicile in developed countries.

Performance implications of diversification strategies during institutional transformations: an emerging market study

Abstract: The purpose of this study is to develop a comprehensive model that examines the impact of corporate diversification, and its interaction effects with ownership structure, industry structure and firm size, in explaining firm performance for three distinct phases of institutional development in an Indian context The conceptual model developed through review of literature is tested using a large sample of publicly traded companies in India, using GLM Univatiate model, for Post-liberalization, Transition and Pre-liberalization phases that span a period of fifteen years Our findings show that diversification firm performance relationship varies as institutions develop Although unrelated diversifiers achieved superior performance during the pre-liberalization phase, focused players performed better during the transition phase Post-liberalization, diversification did not impact firm performance; superior firm performance was driven by the ability of firms to scale, be present in profitable industries and productively use their assets Significant interaction effects were observed between diversification and, industry structure, ownership type and firm size, in explaining firm performance Firms affiliated to large business groups continue to be highly diversified and under performed as institutions developed